Connecticut cities are negotiating deals with solar developers on dozens of contested property tax assessments on residential solar installations.
Solar companies have filed around 200 lawsuits in recent years challenging local assessors’ interpretation of a state law they said sought to exempt residential solar installations from property taxes. Ambiguous language, however, has led some cities to adopt tax systems that supply the electricity grid or belong to third parties.
At least half a dozen of the roughly 20 cities facing such lawsuits have proposed pending settlements, state court records show. And the city of Stratford has solved all of its cases, according to Christopher Tymniak, the city’s executive director. While details of the regulations have not yet been disclosed in most cases, in those that have been, cities agree not to tax the systems in the future. It is not known if they are refunding money already paid by the developers.
“All the cities and all the plaintiffs have been referred to mediation with Judge Ron Kowalski,” said Benjamin Proto, a lawyer representing several cities. “He literally takes these cities by city and tries to find a deal with each one.”
Cities and solar developers have been in a legal stalemate for several years on how to interpret a state status which grants an exemption from the property tax to renewable energy sources that produce electricity for “private residential use”.
As of 2017, a small minority of reviewers began to interpret this to mean that only solar panels owned by an owner and / or that generate electricity solely for the property are exempt, while those that feed the grid or belong to a third party are not.
They began to assess property taxes on solar panel systems in which the owner relied on leases or power purchase agreements – the vast majority of systems in Connecticut. In some cases, facilities have been assessed after having previously been exempted.
Solar companies have started to sue, arguing that the law was intended to apply to leased and net-meter systems as well. This position was supported by Senate Majority Leader Bob Duff, who chaired the Energy and Technology Committee when the exemption was passed.
Efforts to resolve the problem through a legislative solution have so far failed. Lawmakers are trying a new approach this session.
Previous bills expressly exempted all residential signs in the future, while still allowing cities to keep the tax revenue they had already collected on those signs. A bill – HB 6106 – approved last month by the planning and development committee specifies that the exemption applies to solar installations participating in net metering and / or owned by a third party.
“I think the bill has a good chance of getting out of the House, because it just says that in the future you cannot tax solar panels at the municipal level,” said Representative Joseph P. Gresko. , one of the sponsors. “Let the rest be played out in court. If cities want to settle, they can try to settle. “
The town of Stratford, in Gresko, is one of those doing just that. In a settlement, Stratford and Castello Solar I agree that the company’s solar generation systems will be tax-exempt with respect to the 2020 Grand List – the annual list of all taxable and tax-exempt properties – and to the future, unless the law changes. .
The municipality also undertakes not to “hinder” the passage of the HB 6106.
That leaves the question of disputed tax payments made on Castello’s solar systems assessed on the big 2017, ’18 and ’19 lists. The court record indicates that the parties have entered into a separate and confidential written agreement on how to handle these payments. Tymniak declined to say whether the city has refunded any money, noting that other cities are still in negotiations.
“We have developed an aggressive plan to settle all of our cases and remove uncertainty from our books,” Tymniak said. “The more you keep going, the greater the responsibility on both sides. We are always looking for the state to step in and clarify the language because there is a gray area there.
Somers, Fairfield, Greenwich, Killingly and Ansonia have negotiated settlement proposals with various developers who are awaiting approval from each city’s selection board before they are officially filed in court.
Adam Stern, head of CT Solar Leasing, one of the companies sued, said he had reached “satisfactory” settlements. But he said he remained frustrated with the time and expense of a process that he said should never have happened given that “it’s pretty clear that the exemption exists.
“It is very upsetting that many cities continue to spend taxpayer dollars on litigation, and that they are spending multiples more than they ever will,” Stern said.
His firm has submitted a public records request to the Town of Cromwell to obtain invoices for legal fees accrued in his case so far. Copies of these invoices show a total of $ 17,719 invoiced in March. This sum appears to be a “misuse of taxpayer funds,” Stern said, given that the property tax allegedly owed on solar panels owned by his company is $ 1,569 per year, or less than $ 6,000 at that time. day.
Marianne Sylvester, Chief Financial Officer of Cromwell, confirmed that she provided the legal invoices in response to the registration request.
Connecticut is one of 33 states that exempt solar PV systems from property tax, according to testimony submitted in support of HB 6106 by Meghan Nutting, executive vice president of policy and communications at Sunnova Energy Corp .
She said the widely held policy reflects “a common understanding” that “such tax exemptions encourage and advance the deployment of renewable energy systems.”